ETF Market Sees Surge in Crypto and Ex-China Funds Amid Regulatory Shifts

ETF Market Sees Surge in Crypto and Ex-China Funds Amid Regulatory Shifts

The exchange-traded fund (ETF) landscape is experiencing significant transformations, with recent developments highlighting a surge in crypto-focused funds and a strategic shift towards ex-China investments. These changes reflect evolving investor preferences and regulatory dynamics.

Canary Capital’s NFT-Centric ETF Proposal

In June 2025, Canary Capital filed with the U.S. Securities and Exchange Commission (SEC) to launch an ETF primarily investing in non-fungible tokens (NFTs). This proposed fund would allocate 80-95% to PENGU tokens, with the remainder in NFTs and small holdings of Solana and Ether. This move follows the SEC’s more permissive stance under Chair Paul Atkins, encouraging innovation in financial products, particularly in the crypto sector. However, critics highlight the high volatility and speculative nature of NFTs, warning that investors could face substantial losses. The proposal also poses structural challenges, as ETFs traditionally hold fungible assets, while NFTs are unique and difficult to value or trade efficiently. The most grimly inevitable ETF filing of 2025

Trump Media’s Bitcoin ETF Initiative

Trump Media & Technology Group Corp (TMTG), owned by Donald Trump, is on the verge of launching its own Bitcoin ETF, named the Truth Social Bitcoin ETF. The application was submitted by NYSE Arca, and the fund will operate under the Truth.Fi brand, with Crypto.com as the custodian of the digital assets. Despite entering a saturated market with over 60 similar ETFs in the U.S., analysts believe the Trump brand could attract investment, albeit with potential political controversy. This initiative is part of TMTG’s broader strategy to enhance its valuation, following a recent $2.5 billion direct investment in Bitcoin. Trump Media, a un paso de lanzar su ETF de bitcoin

Vanguard’s Ex-China Emerging Markets ETF

Vanguard Group has announced plans to launch a new ETF targeting emerging markets while excluding China. The Vanguard Emerging Markets ex-China ETF is expected to debut later in the summer of 2025. This move addresses growing investor concerns about China’s geopolitical risks and market interventions. The fund will charge a competitive 0.07% fee and is expected to offer substantial exposure to companies in Taiwan and India, which together make up nearly 60% of the index. This development reflects a trend toward managing Chinese investments separately from broader emerging markets. Vanguard files for new ex-China emerging markets ETF

Regulatory Scrutiny on ‘Active’ ETFs

Investment managers are facing criticism for promoting ETFs as actively managed while closely mirroring benchmark indices, a practice termed “shy active” by Morningstar. A survey found that 88% of wealth managers and institutional investors believe these ETFs fail to meet their active management claims. Transparency concerns, especially due to European regulations mandating daily portfolio disclosures, have impeded the launch of genuinely active ETFs, as managers fear revealing proprietary trades. However, new semi-transparent structures introduced in Luxembourg and Ireland are expected to encourage truly active fund strategies by protecting trade confidentiality. Investment managers accused of misleading market over ‘active’ ETFs

Market Performance of Major ETFs

As of June 5, 2025, major ETFs have shown the following performance:

• SPDR S&P 500 ETF Trust (SPY): Trading at $595.93, with a slight increase of 0.033% from the previous close.
• Vanguard S&P 500 ETF (VOO): Trading at $547.65, up 0.026% from the previous close.
• Invesco QQQ Trust Series 1 (QQQ): Trading at $528.77, with a 0.279% increase.
• iShares Russell 2000 ETF (IWM): Trading at $208.44, down 0.282%.
• iShares MSCI Emerging Markets ETF (EEM): Trading at $46.53, up 1.218%.

These figures indicate a mixed performance across different market segments, reflecting the dynamic nature of the ETF market.

Conclusion

The ETF market is undergoing significant changes, with the introduction of crypto-focused funds and ex-China investments highlighting the industry’s adaptability to investor demands and regulatory shifts. As these developments unfold, investors should remain vigilant and consider the inherent risks and opportunities presented by these innovative financial products.